Despite the challenging operating environment in 2024, the ZSE showed moderate recovery from its weak performance in the prior year in which the market retreated 32%. Market Capitalization in real terms was 19% ahead of 2023, closing the year at US$1.76bn. The bourse lost two listings in the year with Edgars migrating to the VFEX whilst Bridgefort delisted. Value traded on the ZSE however fell 30% on an annual basis from US$128mn to US$89mn. On the VFEX, market capitalisation was 6.1% ahead of 2023, benefitting from new listings. Aside from Edgars which migrated from the ZSE, Invictus Energy also listed its depository receipts. Value traded on the VFEX was 117.84% ahead of the prior year at US$56.70mn with innscor and Simbisa contributing 39% and 37%, respectively. Despite a challenging environment, we have seen adaptive consumer facing companies continuing to exhibit volumes growth y/y which in our view underscores a resilient informal sector. An observation is that companies that have invested into capacity such as Padenga and Innscor have managed to defend real balance sheet value in the current environment. Our strategy for 2025 is rooted in a search for safe havens in the face of global geopolitics as well as shifts in commodity prices and currencies. As 2025 will likely be another year of navigating through regulatory and monetary uncertainty, the lack of quality investment opportunities will persist. In our experience, ZSE performance will continue to be driven by liquidity cycles. While real value traded on the ZSE has been on a decline owing to a myriad of issues, we believe that there still remain quality stocks ripe for investment on both bourses particularly when the market gets oversold. However, as a defensive move emanating from money supply developments remaining uncertain, we are in favour of blue chip counters that are consistent dividend payers. Median dividend vield (+1) in the IH universe is at 6%, and select stocks presenting higher dividend yields are Econet at 10.6% and Innscor at 6.9%, which we recommend increasing exposure in at current levels. As a form of diversification post-profit taking, we are also recommending high-yielding money market instruments.
